All about Gifts received from relatives is tax-free: income tax
Christmas is coming right away! And all are excited to exchange gifts to everyone. But do you know that income tax on gifts received from relatives or family members is tax-free? Click here for more details at USTAXFiling.in
The taxability of the gift is decided based on the aggregate value of gifts you get during the year and not based on the individual gift.
Festivals like Christmas are incomplete without gift exchanging. A lot of gifs whether in form of diamonds, cash, gold or financial gifts like land and shares are exchanged between families and friends. The gifts that you get may not always be free from tax. You might need to pay taxes on them if the value of gifts exceeds Rs 50000.
Gifts that you receive up to Rs 50000 are tax-free completely if you have received a gift worth of Rs 55,000 during a particular financial year. Then the complete amount will be taxable under the head section 56 (2) income from other sources of the income tax offers for taxation of gifts received during that year. In case of the aggregate value of all the gifts, whether it is in cash form or any kind during that particular year exceeding Rs 50,000
The threshold amount of fifty thousand rupees applies to the aggregate of gifts you get in that financial year. The taxability of the gift is decided based on the aggregate gift value received during the year exceeds fifty thousand amount then the gifts during that year will be taxable.
Gifts exempt from tax
One important thing to note that friends do not come under the relative category, gifts received from them are taxable. Gifts received from relatives are only exempted from paying tax by the Income-tax act under section 56.
As per the IT Act, following individuals will be claimed as relative- brother, sister, brother or sister of either of the parents, spouse or any linear descendent or ascendant, spouse of the individuals referred above or any lineal descendent or ascendant of the spouse.
Also, gifts received at the time of marriage or wedding are exempt from tax. But, the gift you get on occasions such as anniversary or birthday of a person will be charged to tax.
Gifts you get under will/by the inheritance way and gifts received in contemplation of death of the donor are also free from tax.
How to tax immovable property you get as a gift?
Stamp duty of immovable property is taxable if stamp duty value will exceed considering the value of the immovable property by at least Rs 50000
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